Why Is Wall Street Important?

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December 2, 2015 by tradersnote

When you think of the world financial centres the symbolise capitalism, you should immediately of Wall Street. The New York City landmark means many different things to many different people, but what most will agree on is that it is one of the most important places in the whole of the United States. Being the financial hub that it is, it is worth understanding what makes Wall Street so special in the eyes of the world.

Wall Street Defined

From a physical definition Wall Street is just a street within the borough in Manhattan, but the reality of situation is that it stands for so much more than just that. What Wall Street is home to is the financial core of America, while the road is less a mile long, its clout within the financial realm stretches well beyond that. A large percentage of America’s key brokerage firms and financial organisations line Wall Street. Not only that, various insurance companies, mutual funds, investment banks, hedge funds, commercial banks, asset management firms, currency traders, and other financial institutions also call Wall Street home. While many of these entities will have headquarters elsewhere, they all make sure that they have a presence within the Wall Street hustle and bustle.

Impactful Nature

The United Stakes ranks as the largest economy in the world, producing a GDP of $16.80 trillion. It is almost twice the size of the nearest Asian economy in China. The US also takes the top spot when it comes to market capitalisation, as it hits the heights of a $23.6 trillion market value. In fact, the closest nation in such matter is Japan and they are some way off given that its only $4.6 trillion. Wall Street is where the basis of the US market dominance emerges, as it has a significant impact on the country’s economy. Wall Street is the home of the New York Stock Exchange, which is widely considered to be the biggest stock market in the world when it comes to total market capitalisation and average daily share trading volume. Given the importance of the New York Stock Exchange, it by proxy makes Wall Street just as pivotal to the US economy.

Working Force

What is found on Wall Street can be considered a cumulative working force, as several factors help push it (along with the US economy) forward. The most prominent element behind this working force is the “wealth effect”. The term wealth effect represents the movement of large sums of money within the market, with this being what keeps Wall Street ‘ticking over’. Another element that helps keep Wall Street on the right path is continued business investment. When the market it is in a bull state, it is the pushing forward of business through additional investment that help make Wall Street the force it is. When you look at Wall Street in a general sense it is clear that it is key to the economic success of the United States, with many behind the curtain factors in place making sure that remains the case.

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